Who’s Behind ‘Toxic’ Super PAC Ads? We May Never Know

By Beacon Staff

The secret donors funding a flood of negative ads in the 2012 presidential race are supposed to go public Tuesday. But loopholes in federal disclosure rules mean that Americans will still be left largely in the dark about who is financing what, campaign watchdogs say.

The landmark 2010 Supreme Court case, Citizens United v. Federal Election Commission (FEC), opened a new era in campaign spending. This is the first presidential race since the Watergate era to allow unlimited individual and corporate spending for a candidate. Already, campaign spending by outside groups appears to be eclipsing money spent by candidates themselves.

Jon Huntsman Jr. called the resulting GOP campaign “toxic” when he dropped of the race earlier this month. But with the exception of the $10 million a Las Vegas casino billionaire gave to an independent group backing Newt Gingrich, not much is known about the identity or motivations of deep-pocket corporate and individual donors.

That is not expected to change much with the deadline Tuesday, largely because a gridlocked FEC has yet to come up with rules to govern how big-spending advocacy groups, called super political-action committees, should disclose who they are.

The result, say critics, is a violation of the Supreme Court’s demand for “effective disclosure.”

“You can talk about disclosure all you want, but there have always been clever operators who can get around the law,” says Bill Allison, senior analyst with the Sunlight Foundation, a Washington-based group promoting transparency in government.

“We saw it with soft money, with 527s, like the Swift Boat Veterans, and now with super PACs,” he adds, referring to big-money loopholes in previous campaign-finance reforms.

Candidates’ own campaigns are limited to donations of $2,500 per individual per election. But super PACs can accept unlimited contributions from individuals, corporations, or unions. Unlike other PACs, super PACs are allowed to expressly argue for a specific candidate. They must, however, disclose donors – though it’s not clear what exactly that means.

FEC commissioners, split 3 to 3 along the partisan lines of the presidents who appointed them, have yet to approve rules for regulations affected by the Supreme Court case.

“Such a proliferation of anonymous, negative speech cannot be good for our democracy,” said FEC Commissioner Ellen Weintraub in a Dec. 16 statement, after another FEC deadlocked vote on rulemaking. “Nor is it consistent with the view of eight Justices of the Supreme Court, who ruled that ‘effective disclosure’ is what enables the electorate to make informed decisions and give proper weight to different speakers and messages.’”

Federal campaign laws require that super PACs disclose who is funding them. But, in the absence of FEC rules, some groups are finding ways to disclose without revealing the names of individual donors.

For example, super PACs can list the name of a nonprofit that is legally allowed to keep its donors secret. Or they can donate through front corporations, whose names convey no information to voters.

Restore our Future, a super PAC supporting Mitt Romney, attributed three $1 million contributions to such front corporations. One of them, Spann LLC had no apparent business activity. It was constituted soon before a $1 million contribution to the super PAC and dissolved soon after. Edward Conard, a former colleague of Mr. Romney’s at Bain Capital in Boston, later came forward as the owner.

“The letter of the law is clear: Groups are to disclose who is funding them,” says Michael Beckel, a spokesman for the Center for Responsive Politics in Washington. “But there are a lot of ways in which the high promise of disclosure may not be met, and voters will be in the dark more than the majority of Supreme Court justices imagined when they wrote the transparency and disclosure portions of Citizen’s United.”

Moreover, the timing of the deadline is not ideal, he adds. “Voters will have gone to the polls in Florida, South Carolina, New Hampshire, and Iowa by midnight on Tuesday,” he adds. “The GOP race could be over by the time people who know who is bankrolling it.”

The identity of donors matters, especially in an era of unlimited contributions, he says. In the 2008 campaign cycle, then-Sen. Barack Obama pledged to release the names of this top fundraisers, or bundlers, who had collected at least $50,000 for his presidential campaign or for the Democratic National Committee. Together, some 357 bundlers raised more than $55.9 million for Democrats. Two dozen of the bundlers were appointed by to serve as ambassadors in Mr. Obama’s first year in office.

House Republicans are investigating whether a $528 million federal energy loan for now-failed Solyndra Inc. was a quid pro quo for another big Obama bundler. Republicans did not agree to disclose bundlers in the 2008 campaign cycle, so a comparable analysis of rewards for big donors is not possible.